EMCs Legato Buy Bodes Well for Users

Customers hoping for increased agnosticism.

EMC Corp.s $1.3 billion acquisition of backup software maker Legato Systems Inc. could prove to be positive for the pairs thousands of mutual users. For the deal to succeed, EMC will have to redouble its efforts to prove itself an objective, independent software provider, customers say.

The deal, which is expected to close by next quarter, is EMCs largest ever, surpassing the $1.1 billion it paid for Data General Corp. in 2000. EMCs goal is to increase its software revenue from the current 22 percent to 30 percent by the end of next year, officials said.

"The Legato transaction represents several things in our evolution of open software. Backup is really going to morph into a focus on data recovery. Its going to morph into a focus on replication and ultimately morph into information life-cycle management," said Mark Lewis, executive vice president of open software and chief technology officer.

EMC-Legato: Tale of the Tape

EMC gets:

  • 31,000 customers
  • Closer to goal of 30 percent software revenue by late next year

Customers get:

  • Assurance that software will stay agnostic
  • Technical support improvements
Lewis dismissed criticism of EMCs history of poor third-party support, such as with its ControlCenter product, which was designed to manage any storage brand but saves its best functionality for EMC gear. "That track record should be meaningless," Lewis said. "Our intent with [Legatos] Networker is to keep it completely open and heterogeneous."

The Legato deal also gives EMC, of Hopkinton, Mass., e-mail archiving and hierarchical storage management software, Lewis said.

Users had mixed reactions after the deal was announced.

Legato customers demand support for older, current and future stand-alone versions of Networker. Their fear is that EMC will launch features optimized for ControlCenter, requiring licenses for software that users had no plans to purchase. EMC users, meanwhile, are concerned about the companys commitment to support third-party backup, such as Computer Associates International Inc.s BrightStor, IBMs Tivoli Storage Manager and Veritas Software Corp.s NetBackup. But barring major changes or large discounts from EMCs competition, customers say theyll stick with what they have.

Adam Jackson, systems administrator at Bell Canada, in Toronto, said he hopes EMC can bring better resources to his Legato backup on Sun Microsystems Inc. hardware. "[Legato is] not really focused up in Canada where we are. Making it a bigger company will probably [improve] support," Jackson said.

On the flip side, EMC " doesnt have a great track record of supporting a lot of third-party technologies. Theyre coming and cramming their product of the week down our throats," said a storage administrator at a major East Coast stock market, who asked not to be named. EMC had tried to get the customer to use switches from its former subsidiary, McData Corp.

"We looked at other SAN [storage area network] management technologies; there was always resistance," the user said. "This is probably going to be another case."

For examples of hardware companies that havent interfered with their softwares agnosticism, customers can look to IBMs Tivoli or to Hewlett-Packard Co.s OpenView, said Gartner Inc. analyst Ray Paquet, in Framingham, Mass. "Backup is typically flowing through a server, not direct from storage," Paquet said.

HP will continue with its recently announced partnership to resell Legatos EmailXtender and DiskXtender archiving software, officials at HP, in Palo Alto, Calif., said. Officials of Network Appliance Inc., in Sunnyvale, Calif., did not comment on the companys relationship with Legato.

Meanwhile, EMC officials said theyre already looking ahead to the next acquisition. EMC CEO Joe Tucci declined to comment specifically, but EMC still has its $5.7 billion cash reserve on hand, industry watchers said.